Wheat, Corn Push Higher as Russia-Ukraine Conflicts Escalates

Agricultural commodities are pushing higher as the Russia-Ukraine conflict continues to escalate. In particular, the collapse of a major dam in southern Ukraine translated to higher wheat and corn prices.

Surrounding the dam are sizeable agricultural fields, putting crops in danger. Oil escaping from the dam machinery and massive flooding could also cause extreme environmental harm, including the pollution of drinking water.

“The short term impact is the damage of grain silos and other equipment situated in the low banks of the river,” said Sergey Feofilov, head of UkrAgroConsult. “Exactly which silos, whether grains are in the silos, and how much of the grain might be rotting is unclear immediately now. The long-term impact will be much more dramatic.”

“Ukraine has historically been one of the major exporters in the world wheat market,” Joe Janzen, assistant professor at University of Illinois Urbana-Champaign’s College of Agricultural, Consumer and Environmental Sciences, told The Associated Press. “Anytime there’s news out of that part of the world, the market is sensitive to that.”

Traders who want easy access to rising wheat and corn prices can look to products from Teucrium. For wheat, the Teucrium Wheat Fund (WEAT) provides investors with an easy way to gain exposure to the price of wheat futures.

Those looking to trade corn can use the Teucrium Corn Fund (CORN), which tracks three futures contracts for corn that are traded on the Chicago Board of Trade, including 35% second to expire contracts, 30% third to expire contracts, and 35% December following the third to expire. The various contract exposures help the fund limit the negative effects of rolling contracts, especially during a market in contango.

Endangered Crops Could Propel Ag Commodities

The conflict could propel the overall ag commodities market higher. Short-term traders or long-term investors who want an all-encompassing approach can use the Teucrium Agricultural Fund (TAGS), which is essentially a fund of funds (including the aforementioned WEAT and CORN), and it features a low 0.13% expense ratio, combining exposure to corn, wheat, soybeans, and sugar through other Teucrium funds that focus specifically on these commodities.

“The dam breach, which, like Russia’s original invasion in February 2022, was widely predicted, confirms that an escalation of the war has begun,” said Sal Gilbertie, CEO of Teucrium, in an email to VettaFi. “The willingness to destroy such a critical piece of infrastructure indicates all bets are off and that anything can happen. Unfortunately, the next few weeks and months of the war are likely to have global implications, especially for agriculture and energy markets.” It offers an ideal option to get ag commodities exposure without having to hold various commodities for diversification purposes.

For more news, information, and analysis, visit the Commodities Channel.